Baker Hostetler Washington, D.C., partner Donald A. Workman was quoted in the article, “Borders to Delay Payments,” which appeared in The Wall Street Journal on January 31, 2011.
Borders Group Inc. announced that it will delay January payments to vendors, landlords and others because it may be headed to bankruptcy court. The No. 2 U.S. bookstore chain, by sales, said the move was intended to preserve liquidity as it works to restructure and is pursuing alternatives, including an in-court restructuring.
Earlier, the company said it had reached a deal to get a $550 million secured credit line from General Electric Company’s finance arm and that would resolve its cash crunch. General Electric said that in order to provide the funds, Borders would have to meet tough conditions, including reaching an accord with its publishers to convert late payments to $125 million in debt that Borders would repay later. A person familiar with the matter said this is a long shot for Borders to get all the pieces in place. The deadline for publishers to make concessions is not known.
“It seems very likely, if not inevitable, that Borders will have to file bankruptcy,” said Workman, who heads the bankruptcy practice in Baker Hostetler’s Washington office and isn’t involved with the negotiations.
Borders ultimately filed for Chapter 11 on February 16, 2011.